Analysis: Gala Coral, what happens next?
With the operator's stakeholders considering cashing in, eGR looks at what paths are available to Gala Coral
If mounting press speculation is to be believed, Gala Coral has already laid out plans to float the Gibraltar-licensed private company in the coming months.
Despite Coral Interactive chief John O’Reilly last month telling eGaming Review that no sale was imminent, he did concede that shareholders were taking advice and the possibility of floatation was on the table.
Although exactly what Gala Coral may look like come the time of an IPO remains to be seen with further reports linking the group to a £250m sale of its Gala bingo halls. However, if its plan is to dispose its land-based bingo business, it has a curious way of going about it.
Last week, Simon Wykes, Gala Coral managing director seemed to warn potential suitors off investing in bricks and mortar bingo, citing a strict VAT regime as a burden to the industry. “[It would be] easier to get a return elsewhere in the leisure industry because of the VAT issue,” he is quoted as saying.
The comments do, however, suggest that Gala Coral would rather shed its roughly 140 halls in a similar move which saw it sell 19 of its 23 casinos to Rank for £179m back in March. If an IPO is in the pipeline it would make strategic sense to rid itself of something it believes to be holding back profits.
If a bingo hall sale was to transpire, it would practically bring to an end the Gala brand on the high street, throwing up the possibility of the group rebranding to the more dominant Coral wrapped around the Gala online brands. This option is also understood to be on the table, however, as things stand, this remains an unlikely immediate outcome with shareholders thought to prefer a Gala Coral IPO.
Why stop at bingo halls and land-based casinos? It’s not out of the realms of possibility that Gala Coral could switch to a purely remote business. eGaming Review understands Coral has previously considered a remote only strategy so the sale of the shops can’t be ruled out.
With more than 1,600 shops scattered all over the country, the Coral fleet would be a prized asset for a bookmaker looking to make its mark on the high street. However, unlike bingo halls, the Coral shops turn a good profit so any deal would have to tick the right boxes.
That would leave the interactive division going public or possibly a private sale to the likes of a GVC or even current software supplier Playtech “ although the latter’s recent 3% interest in Ladbrokes could prove a stumbling block. Group chief exec Carl Leaver and non-exec chairman Rob Templeman certainly know the City well and are sure to have made themselves known to private investors.
With all options said to be on the table, it’s anyone’s guess which way Gala Coral turns next and eGR understands no firm decision has been taken. But based on the noises coming out of the company a new direction is likely to be coming soon.